The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

Throughout the games industry there is a big debate on the legality of Mod Chips, those nifty little circuit boards and cartridges that allow for people to do things with video game consoles that the manufacturers did not intend. We all know what they are capable of doing, pirating games being the most hotly debated. What we may not realize is that they have a lot in common with another device that has become a home staple, the VCR.

Back in the 70s, Sony introduced their entry in the home video cassette format war, Betamax. Betamax, much like VHS, allowed for the recording and playback of television broadcasts. Some companies in the entertainment business were not happy as they felt that the ability for home viewers to record shows and movies and play them back at later times constituted copyright infringement and that Sony should be held liable for providing the tools that made it so easy.

So what did these entertainment companies do? They sued Sony. This case went all the way to the Supreme Court of the United States and became known as Sony Corporation of America v. Universal City Studios, Inc. (http://supreme.justia.com/us/464/417/case.htm)

So what makes this case so important when discussing mod chips? Let's take a look at some of the key points to be found in the case:

What Makes a Contributory Infringer?

If vicarious liability is to be imposed on
Sony in this case, it must rest on the fact that it has sold equipment
with constructive knowledge of the fact that its customers may use that
equipment to make unauthorized copies of copyrighted material. There is
no precedent in the law of copyright for the imposition of vicarious
liability on such a theory.

At the time there was no precedent for what Universal and Disney were seeking, the complete barring from commerce the Sony Betamax Recorder.

They felt that the fact that people could use video recorders to infringe copyrights held by their studios was enough to ban the recorders from the public.

Unfortunately for them and fortunately for us, the Supreme Court did not agree.

[A] sale of an article which though adapted to
an infringing use is also adapted to other and lawful uses, is not
enough to make the seller a contributory infringer. Such a rule would
block the wheels of commerce.

Accordingly, the sale of copying equipment,
like the sale of other articles of commerce, does not constitute
contributory infringement if the product is widely used for legitimate,
unobjectionable purposes. Indeed, it need merely be capable of
substantial noninfringing uses.

Wait what is that? Lets read that last bit again: Accordingly, the sale of copying equipment ... does not constitute
contributory infringement if the product is widely used for legitimate,
unobjectionable purposes. Indeed, it need merely be capable of
substantial noninfringing use.

So the product doesn't need to be widely used for legal uses it just merely needs to be capable of legal uses to prevent the manufacturer from being held liable for copyright infringement performed by users of the product.

So if Sony could not be held liable as a Contributory Infringer because their product is capable of noninfringing uses, where does that leave Mod Chips? Let's look again at the next significant part of the Betamax Ruling:

Significant Noninfringing Uses

The question is thus whether the Betamax is
capable of commercially significant noninfringing uses. In order to
resolve that question, we need not explore all the different
potential uses of the machine and determine whether or not they would
constitute infringement. Rather, we need only consider whether, on the
basis of the facts as found by the District Court, a significant number
of them would be noninfringing.

So we need only consider whether a significant number of uses of Mod Chips is noninfringing.

So let's look at the uses of Mod Chips:

Playing of games the individual did not purchase (piracy)

Playing of software that was developed and released through channels other than the hardware provider (homebrew software and games)

Playing games that are not available for the conusmer's region

Playing games on platforms other than the ones they were made for (format shifting/emulating)

Playing of back up copies of games

Consolidation of game libraries.

Before we get into any detailed discussions of the the legalities of these uses, let's look a bit more at the Betamax case.

Even if it were deemed that home-use recording
of copyrighted material constituted infringement, the Betamax could
still legally be used to record noncopyrighted material or material
whose owners consented to the copying. An injunction would deprive the
public of the ability to use the Betamax for this noninfringing
off-the-air recording.

Hold on a sec. So even if home recording of copyrighted material were deemed to be illegal, Sony could still make and sell the Betamax recorder because there are people out there that would consent to the recording of their copyrighted work as well as people can record non-copyrighted works?

So does that mean that even if people can play pirated games using mod chips that they can still be legal to produce and sell because people can use homebrew software and play copies of games they have purchased and still retain ownership of?

Whatever the future percentage of legal versus
illegal home-use recording might be, an injunction which seeks to
deprive the public of the very tool or article of commerce capable of
some noninfringing use would be an extremely harsh remedy, as well as
one unprecedented in copyright law.

A harsh remedy indeed. To completely ban mod chips because one of its uses is illegal would be harsh for the owners of the patents and the public as well.

Conclusion

It seems extraordinary to suggest that the
Copyright Act confers upon all copyright owners collectively, much less
the two respondents in this case, the exclusive right to distribute
VTR's simply because they may be used to infringe copyrights. That,
however, is the logical implication of their claim. The request for an
injunction below indicates that respondents seek, in effect, to declare
VTR's contraband

Is it the right of one group of copyright owners to declare contraband the tool used by other copyright holders to get their product into the hands of consumers? In other words, is it the right of Sony, Microsoft and Nintendo to declare that the channel of distribution and playback of homebrew games and software illegal thus depriving those homebrew developers of their consumers?

Is it the right of one group of copyright owners to declare contraband the tool used by consumers to protect their investment in copyrighted works? In other words, is it the right of Sony, Microsoft and Nintendo to declare the tool used by consumers to protect their property from damage and destruction through the use of back ups and consolidation illegal? Is it the right of Sony, Microsoft and Nintendo to deprive consumers the right to do so even if the true owners of the copyrights allow or approve of the use of back ups and consolidation?

Unfortunately these questions cannot truly be answered until a case involving the legalities of mod chips reaches the Supreme Court.

Related Jobs

WB Games —
San Francisco,
California,
United States
[07.31.15]
Game Director